The 2ndInternational Conference on International Trade and Investmentwith the theme, ‘Financial Crisis and Trade and Investment in Developing Countries’, was organized by the University of Maurtitius and the WTO Chairs Programme and was held on 24 – 26 October 2012 at the Hotel le Meridien in Mauritius.

Dawid, Ermie, Sonja and WIlma at the conference

The conference was a wonderful networking opportunity as all the participants focus their research and/or teaching on international trade and investment. Some delegates have exceptional expertise in these fields and many discussions on possible cooperation took place during the tea and lunch breaks, but ALSO on the beautiful beach during the cocktail functions!

The keynote address at the conference was from Prof Oliver Morrissey of the University of Nottingham with the theme: “Well Past Doha: Trade and Investment Issues for Africa in the current economic environment”. The conference also included a Round Table discussion on “The Financial Crisis, International Investment and Trade” and the panel included Prof O. Morrissey of the University of Nottingham in the UK, Prof.H Kramer of the University of Karlsruhe in Germany, Dr. A Keck of the World Trade Organisation (WTO), Mr. R Munoz-Moreno of the World Bank, Prof. R. Grynberg, senior research fellow at the Botswana Institute for Development and Policy Analyis (BIDPA) and Hon Sayyad Abd-Al-Cader Sayen-Hossen (Minister of Industry, Commerce and Consumer Protection of Mauritius). A plenary session included the following two topics: “They prefer it Rough: The future of diamond beneficiation in Botswana” by Prof. Roman Grynberg and “The Crisis of the European Monetary Union: Origins, Consequences, Remedies – A Critical Assessment of Common Explanations and Adopted Measures” by Prof Hagen Kramer.

Four participants of the TRADE research niche area and colleagues of the School of Economics, prof Wilma Viviers, drs Ermie Steenkamp, Sonja Grater and David Spies attended the conference and the delivered the following papers.

1) LINKING EXPORT OPPORTUNITIES OF PRODUCTS AND SERVICES: THE CASE OF SOUTH AFRICA

SONJA GRATER, ERMIE STEENKAMP, WILMA VIVIERS & LUDO CUYVERS

Trade in services has been playing an increasingly important role in the economic growth and development of many countries. In addition it has been found that services trade is more crisis-resilient than goods trade, leading to the need for developing countries especially to explore export opportunities in this sector. However, increasing the exports of services is a major challenge for most countries, given the complicated nature of services trade. Many governments are unaware of potential export opportunities for services and are therefore unable to successfully promote services in the right markets. In their attempts to explore new markets, most services firms tend to follow products in their exporting efforts due to products and services becoming more and more interlinked, thereby offering clients a total package of products with their related services.

This study investigates how the results of the recently developed decision support models (DSM) for products and services respectively could serve as possible solution to the problem of identifying realistic export opportunities for services. The two DSM models for products and services respectively were developed to identify realistic export opportunities in foreign markets by following a sequential filtering process that eliminates those product-country and service-country combinations that hold the least export potential based on a set of macro- and micro-level criteria. This study analyses the results of both models as it was applied in the case of South Africa, to determine whether a linkage between the two sets of results could provide the government with those products and supporting services that hold the highest combined export potential. If the results of the models can be combined in such a manner, the government could use it in a more focussed export-promotion approach, which can result in a significant increase in exports of both sectors, but especially the services sector.

2) CONSTRUCTING A MARKET ACCESSIBILITY INDEX FOR SOUTH AFRICAN PRODUCTS IN AFRICA

ERMIE STEENKAMP & WILMA VIVIERS

A successful export effort requires an assessment of market access conditions when identifying market opportunities. Furthermore, market openness has a positive effect on growth in African economies and the lack of openness was found to be the largest contributor to Sub-Saharan Africa’s bad economic growth performance. This study therefore set out to develop a market accessiblity index for South African products into the rest of the African continent.

Based on the relevant literature, the market accessibility index developed for this study takes the international shipping time and cost per country, domestic time and cost to import per country, logistics performance per country and ad valorem equivalent tariffs and non-tariff barriers per product-country combination into account.

These (quantifiable) constraints to market access have been used in a principle components analysis to construct a market accessibility index for South Africa into other African countries. Three factors were found that measure the market accessibility of a market, which include (i) an international factor (international shipping time and cost), (ii) a dometic factor (domestic time and cost, logistics performacne index) and (iii) a barrier factor (ad valorem equivalent tariff and non-tariff barriers).

Results show that the most accessible African countries for South African export products are Swaziland, Lesotho, Malawi, Mauritius, Namibia and Botswana. The least accessible countries are Chad, Sudan, Equatorial Guinea, Sierra Leone, Algeria and Angola. On average, it takes 16.8 days longer than the world average for the domestic shipment of goods in African countries. The average domestic cost to import to Africa is almost double the world average. The average African logistics performance index is also lower than the world average and the average ad valorem equivalent tariff in Africa is almost 5% higher than the world average. African countries therefore perform worse than the world average in all the measures of market accessibility accept for the time and cost of international shipment. The abovementioned observations underline the fact that the largest impediments to trade in Africa are poor infrastructure and other logistical problems.

Namibian exports of red meat products are currently limited to only a few markets, including South Africa (46%) the European Union (29%) and Norway (2%). This is raising concerns due to the proposed termination of the provisional preferential market access under the Interim Economic Partnership Agreement with the European Union by 2014. This potential policy change, in conjunction with the current narrow base of export markets, forces Namibia to explore alternative export opportunities in order to diversify its export markets for red meat products.

The primary objective of this study is to weigh the importance of the trade restricting variables included in the composite market accessibility index by comparing the outcomes of three different approaches to a data set consisting of 75 countries and 28 red meat products. These approaches included (i) budget allocation approach (BAP), (ii) equal weights (EW) and (iii) factor analysis (PCA/FA). The results show that the perceived weights by industry experts (BAP) did not deviate much from the weights calculated by PCA/FA. Therefore if industry experts are not willing to participate in the weighing process or where there are large variations in the individual weights assigned by the experts and not agreement; the PCA/FA method can be used as an alternative.

Besides a wonderful conference we were also able to spend a day exploring Mauritius and were pleasantly surprised with the friendly people and beautiful sights. We were also able to share a few cocktails and lots of laughs.